Cutting the Bank Down to Size: Efficient and Legitimate Decision‐making in the European Central Bank After Enlargement

This article examines the problems enlargement poses for one specific supranational organization, the European Central Bank (ECB). The article synthesizes three different literatures, on enlargement, ECB transparency and legitimacy, and effective monetary policy‐making, which up until now have not been linked. The three issues are related, and ought to be considered together when policy choices regarding institution‐building are made, because the choices in one issue constrain those in the others. Specifically, the argument is that transparency in the decision‐making process is key to allowing the denationalization of decision‐making to make it more effective. The more transparent the policy‐making process is, the easier it is to have a rotation of votes. Conversely, if the policy‐making process is opaque, a system of combining regions into one voting entity is better because the citizenry is represented in every vote, even if in a highly diluted fashion. The proposed ECB reform does not adequately address legitimate concerns on the part of the public as to how the decisions are made within the Governing Council.